Normally, news of job cuts does good things for share prices. It’s a cost-cutting move and a way to show you’ve got the intestinal fortitude to make the “tough calls.” But Monday afternoon’s trading proved that wasn’t always so, as Goldman Sachs’ (NYSE:GS) share price dipped fractionally after announcing its own plans for staff cuts.
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Goldman Sachs announced it was planning to cut 123 jobs as merger & acquisition (M&A) activity falls off. With such deals grinding to a comparative halt, the sheer number of staffers required to handle those deals falls accordingly. Thus, Goldman Sachs is looking to pare back its staff. However, it won’t be the minimum-wage tellers, janitors, or what have you getting shown the door. This time, it’s managing directors and investment bankers targeted for dismissal, according to the ever-popular “people familiar with the matter.”
With deal values on the decline—a New York Post report notes that deal values total around $1.2 trillion this year, down 40% against last year’s figures—that’s a pretty fair reason to show dealmakers to the door. In fact, Goldman Sachs is currently the number two global adviser, a position it hasn’t occupied at this point in the year since 2018. This isn’t the first time Goldman Sachs has cut jobs recently, either; back in September, mid-level investment bankers got cut to where between 1% and 5% of the total were dismissed.
Despite this, however, analysts are very strongly backing Goldman Sachs. With 12 Buy ratings and two Holds, Goldman Sachs stock is considered a Strong Buy. Further, with an average price target of $404.14 per share, Goldman Sachs stock offers its investors 28.77% upside potential.